The logical extension of the analysis of the preceding section is to explore the relationship which exists in Robertsonian theory between saving and investment. In this one encounters the theory of the rate of interest since the Robertsonian approach argues that changes in saving act upon investment via the rate of interest. First thoughts on this subject might lead one to believe that interest theory is straightforward — there seems little controversial in the proposition that savings will act on investment through changes in the rate of interest; but the 1930s saw the elevation of interest theory to a position of extreme importance in the theoretical debates surrounding especially Keynes’ Treatise and the General Theory and the work of the Austrian and Swedish schools on industrial fluctuation.1
KeywordsInterest Rate Commercial Bank Money Supply Marginal Productivity Disposable Income
Unable to display preview. Download preview PDF.
The Robertsonian Theory of Interest
- 11.E. Boehm-Bawerk, Recent Literature on Interest, (London and New York: Macmillan, 1903).Google Scholar
- 23.G. Cassel, Nature and Necessity of Interest, 1903.Google Scholar
- 30.F. Ramsey, ‘A Mathematical Theory of Saving’, EJ, (December 1928) pp. 543–59; for a fuller discussion of this model see (Conspard, AnIntroduction to the Theory of Interest, pp. 83–9.Google Scholar
- 37.F. Ramsay, op cit., A. Lerner, The Economics of Control, (New York: Macmillan, 1944).Google Scholar